Demand based pricing, Marketing Management

Assignment Help:

Demand Based Pricing: Described methods belong to the category of demand / market based pricing:-

1. What the Traffic can Bear' Pricing

2. Skimming Pricing

3. Penetration Pricing

  • What the Traffic can Bear' Pricing: The seller takes the maximum price that the customers are eager to pay for the product under the given circumstances. This technique is used more by retail traders and than by manufacturing firms. This method brings big profits in the short term objective. But in the long run it is not a safe concept; chances of errors in judgment are very high.
  • Skimming Pricing:This method aims at high profits & high price in the early stage of marketing the product. It gainfully taps the opportunity for selling at high prices to those segments of the market, which do not bother much regarding the price. This particular method is very useful in the pricing of new products, especially those that have a luxury or specialty elements.
  • Penetration Pricing: Penetration pricing seeks to gain greater market penetration throughout relatively low price. This method is also helpful in pricing of new products under definite circumstances. For instance :when the new product is capable of bringing in large volume of sales, but it is not a luxury item and there is no affluent / price insensitive segment, the firm can select the penetration pricing and make large size sales at a reasonable price before competitors enter the market having a similar product. Penetration pricing in such type of cases will help the firm have a good coverage of the market and keep competition out for some time.

The price elasticity of demand is taken into account in all of the demand based pricing methods, indirectly or directly. Price elasticity of demand refers to the relative sensitivity of demand for a product to changes in its value in other words how significantly the sales of the product are affected when price is changed. If decrease or increase in the price of the product results in significant increase or decrease the product is said to be price elastic conversely, if price change does not considerably affect the sales volume, a product is called to be price inelastic.


Related Discussions:- Demand based pricing

Features of advertising, Features of advertising 1. It is mass communic...

Features of advertising 1. It is mass communication process every piece of advertising  gurantees satisfactionof  human wants and wnts  them from needs and desires advertisers

Put video games in their life cycle, considering the concept of product lif...

considering the concept of product life cycle, where would you put video games in their life cycle

Product mix, product mix of the lg company

product mix of the lg company

Objective of pricing decision, Objective of pricing decision: a firm may c...

Objective of pricing decision: a firm may choose its pricing objectives from any of the following: 1. To maximize the profits: the primary objective of the pricing decision i

Explain diffrent types of illustration of print-ad-copy, Q. Explain diffren...

Q. Explain diffrent types of Illustration of print-ad-copy? Types of Illustration:- Photo of Product. Photo of Product in use. Photos from different angle.

What is marketing transaction, What is marketing transaction? A marketi...

What is marketing transaction? A marketing transaction is one in that the buyer and the seller, not individual of the nature of the product, skill mutual satisfaction the selle

How is forecast sale in marketing research, How is forecast sale in marketi...

How is forecast sale in marketing research? Forecast Sale in Marketing Research: Marketing research assists in marketing planning and sales forecasting. The researchers c

Strategic and distinct comprtitors.., 2types of competitors strategic and d...

2types of competitors strategic and distinct competitors and also identify you strategic competitor and also identify strength and weaknesses of strategic competitor.

Determine the importance of product - marketing mix, Determine the importan...

Determine the importance of Product - Marketing mix Product refers to goods and services offered by the organisation. A pair of shoes, a burger, a lipstick, all are product

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd